Is the U.S. Workforce At Full Recovery?
We've updated our monthly workforce analysis to include last week's Employment Report for June. The unemployment rate ticked back up from 4.3% to 4.4%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) surprised forecasts at 222K.
The Unemployment Rate
The closely watched headline unemployment rate is a calculation of the percentage of the Civilian Labor Force, age 16 and older, that is currently unemployed. Let's put this metric into its historical context. The first chart below illustrates this monthly data point since 1990.
In the latest report, this indicator inched up to 4.4%. The age 16+ population increased by 190 thousand, and the labor force (the employed and unemployed actively seeking employment) increased by 361 thousand. The number of employed increased by 245 thousand and the ranks of the unemployed jumped by 116 thousand. Essentially the increase in the unemployment rate was not the result of increased unemployment but rather the swelling labor force, especially the number employed.
Unemployment in the Prime Age Group
Let's look at the same statistic for the core workforce, ages 25-54. This cohort leaves out the employment volatility of the high-school and college years, the lower employment of the retirement years and also the age 55-64 decade when many in the workforce begin transitioning to retirement ... for example, two income households that downsize into one-income households.
In the latest report, this indicator remained at 3.8% (to one decimal place) from the previous month. The cohort population increased by 65 thousand and the labor force increased by 160 thousand. The breakdown of the growth is an increase of 31 thousand employed and an 185 thousand increase in the unemployed. Most of the subdued labor force growth was due to the increase in the number unemployed.